How much to keep in each sinking fund
The right amount for a sinking fund is what that expense actually cost you last year, adjusted for anything you know will change. Here are typical starting points.
Typical targets
| Category | Typical yearly target | Per biweekly check |
|---|---|---|
| Holiday gifts | $600–$1,200 | $23–$46 |
| Car repairs & maintenance | $600–$1,200 | $23–$46 |
| Tires | $150–$300 | $6–$12 |
| Car registration | $100–$250 | $4–$10 |
| Car insurance (if paid 6-monthly) | $1,200–$1,800 | $46–$69 |
| Home or renters insurance | $200–$1,500 | $8–$58 |
| Medical / dental copays | $300–$1,000 | $12–$38 |
| Back to school | $200–$500 | $8–$19 |
| Birthdays | $200–$500 | $8–$19 |
| Vacation | $1,000–$3,000 | $38–$115 |
| Annual subscriptions & memberships | $150–$400 | $6–$15 |
| Pet care / vet | $300–$800 | $12–$31 |
| Clothing | $300–$800 | $12–$31 |
| Home repairs (owners) | $1,000–$3,000 | $38–$115 |
| Christmas travel | $400–$1,200 | $15–$46 |
Wide ranges by design: household size, location and car age change these a lot. Use your own numbers when you can.
How to size from your own history
- Search last year's bank and card statements for each category.
- Add up the year's total.
- Adjust for known changes (new car, new baby, a planned trip).
- Divide by 26 for biweekly, or use the calculator if the expense is due sooner than a year away.
When a fund is "full"
For recurring expenses (gifts, insurance) the fund is full when it reaches the target before the due date; then you spend it and start again. For open-ended ones (car repairs, home repairs) set a cap, such as $1,500, and stop contributing when you hit it.
Example: one family's sinking fund plan
Two adults, one child, two cars, renting. From last year's statements: gifts $900, car repairs $1,100, registration $210, renters insurance $240, copays $600, back to school $350, vacation $1,800. Total $5,200 a year = $200 per biweekly check. They fund gifts, car repairs and back to school from every check ($90), and put both extra 3-paycheck checks toward the vacation and insurance funds.
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Frequently asked questions
How much should a car repair sinking fund have?
Many people target $600–$1,200 a year, more for older cars. A cap of $1,000–$1,500 covers most common repairs.
Should my sinking fund be as big as my emergency fund?
No. Each sinking fund matches one expense; your emergency fund covers several months of essentials.
What if a sinking fund runs short?
Pay the difference from the next paycheck and raise next year's target.